IBM chief Ginni Rometty insisted on Monday that the more than 60 percent premium the tech giant is paying for Linux software distributor Red Hat is a "fair price."
"I don't think the world realizes that Linux is the number one platform," she said on CNBC's "Squawk Box," a day after Big Blue made its largest acquisition and the third-biggest U.S. technology deal ever. "This is about lifting all of IBM."
"For us, it's all about resetting the cloud landscape" to become the "number one hybrid cloud provider," Rometty said, reiterating that IBM aims to be both a "cognitive and cloud company."
IBM, which has been playing catch-up to Amazon and Microsoft in the cloud infrastructure business, will pay about $33 billion cash for all shares of Red Hat at $190 each. That's about 63 percent higher than where Red Hat shares closed on Friday at $116.68 each.
The premium is a "fair deal," Rometty said, adding Red Hat CEO Jim Whitehurst has built a great company with "high growth" and "high profit."
Meanwhile, with the intent on maintaining its "leverage profile," IBM will pause its share repurchases in 2020 and 2021, a move that Rometty describes as "being prudent about our debt level." IBM won't touch its dividend.
Shares of Red Hat were 47 percent higher Monday, at $171.53. IBM shares were down 1.1 percent Monday after sliding during the premarket.
Rometty expects shareholders to be confident in the deal once they understand it fully, adding she's gotten a "gauge by the hundreds of letters" from investors and clients.
Whitehurst, appearing on CNBC alongside Rometty, said the combined company will be the largest contributor to open-source software. "We will [also] remain distinct because we want our customers to understand that Red Hat coming in is a neutral sell," said Whitehurst, who will be joining IBM's senior management team, reporting to Rometty.
Addressing a question about his commitment upon completion of the deal, the 51-year-old Whitehurst said, "I'm in this for the long run. I'm young. I plan to to be here for the rest of my career."
Programming note: For more on the deal, watch IBM CEO Ginni Rometty and Red Hat CEO Jim Whitehurst's interview on CNBC's "Mad Money" Monday at 6 p.m. ET.
— CNBC's David Faber, Ari Levy and Jordan Novet contributed to this report.